Genuine and fake charities have been misused for terrorist financing and fraud. Financial institutions must protect themselves from being used by terrorist to financing terror operations. Similarly, individuals must be alert no to donate their hard-earned money before they are confident that the money would not fall in the wrong hands.
Originally, charities were formed to provide aid to groups of the community that need assistance. The majority of charities are legitimate channels to help people in need. However, some charities are frauds that have been created to take advantage of the needy and the generous.
And some charities have been used for money laundering or terrorist financing. For example, In February 2004, the assets of Al Haramain Foundation's (AHF) branch in Oregon were blocked. AHF has allegedly violated currency and monetary instrument reporting requirements, tax laws, and other money laundering offences. According to International Narcotics Control Strategy Report of 2005, individuals connected with AHF appear to have concealed movement of over $100,000 to Chechen mujahideen.
How Charities Raise Funds?
Charities rely on several methods to collect funds for philanthropic or humanitarian purposes. Most rely on a variety of income sources that can include:
There are several solicitation methods, which include mandatory religious donations. A charity can raise funds in many different ways. Examples of most poplar solicitation techniques are:
Part of these funds have been and are vulnerable to being diverted to terrorist networks, often without the donor's knowledge.
How Financial Institutions Apply `Know Your Charity'
Financial institutions must carry out enhanced due diligence on charitable organization accounts. The relationship must be approved at a senior management level and risk-rated `high'. The relationship officer should visit the premises of the charitable organization and prepare a visit report. The report should include sufficient details such as:
Tips Before You Donate Money
As a donor, you should have some answers before you give money. Questions frequently asked are "How do I know that this charity is legitimate?" and "Where does this money go once I make a donation?" The following tips are designed to help you know whether a charity is genuine and how to avoid being victimized by a charity that is not legitimate or that may fund terrorists without your knowledge:
On November, 7 2002, the US Treasury Department issued a document entitled "U.S Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S Based Charities." The guidelines are mainly aimed at financial institutions and charitable organizations. However, the Treasury Department also advises individual companies that donate directly to charities to regularly check its list of individuals and organizations the department has designated as related to terrorism. (The list and the guidelines can be found at www.treasury.gov)
Donating to a charity is a way to support the needy during these troubled times. Sadly, there are some people ready to take advantage of your kindness. Therefore, you must do your homework before donating your hard-earned money and reasonably take all measures to ensure that the money does not fall in the wrong hands.
The 10 Commandments of Good Governance in Banks
In the wake of financial upheavals, the banking sector's stability has become a focal point for global economic health. Good governance within banks is not just a regulatory requirement but a cornerstone for trust and sustainability. This article delves into the essential principles that banks should adhere to for robust governance, drawing from industry best practices and regulatory insights. These tenets serve as a blueprint for banks to fortify their operations and align with stakeholder expectations.Corporate Social Responsibility in Banks; What does it mean?
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